Thread by @sarayupani

Looking at the stories coming out of China, it’s increasingly clear that we were rather shortsighted in 1999 in fighting to keep labour standards out of the mandate of the WTO.

A thread

https://twitter.com/buzzfeednews/status/1343617014011670528

In 1996, in the inaugural WTO ministerial in Singapore the US tried to introduce what would be called a “social clause” in multilateral trade agreements. This would make certain labour standards mandatory in all member countries.

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The motion failed in Singapore. It was defeated mostly by developing countries who saw it as a means to negate their low cost labour advantage. They argued it amounted to using labour standards as a form of protectionism.

(An understandable argument at the time.)

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In the second ministerial at Seattle in 1999, the issue became obfuscated in extreme statements of national pride and against external interference in labour matters, especially in the Indian delegation. We stormed out saying “we cannot drink one drop of poison”

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At the time, this position was cheered by some on the left. Stuck in an old first world versus third world narrative, left leaning papers spoke strongly against the US/ developed world and their attempts to bulldoze labour standards into trade.

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In the middle of all the jingoistic hullabaloo, we missed a critical point. Taking labour standards out of the mandate of trade agreements may have given us some gains, but the real beneficiaries of the move were countries like China.

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Without labour standards on the table, we lost out in a few ways: First, we were unable to restrict Chinese goods (even goods made by unpaid or prison labour) from flooding our own markets without resorting to tariffs

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Second, our so called “cheap labour” advantage was steadily chipped away by countries with even cheaper labour (Bangladesh, Vietnam etc). And our advantage over these countries - long standing systems to protect labour rights- gave us no competitive advantage.

Third, there was no accepted multilateral framework for countries with functioning labour standards to push back against Chinese manufacturing. As a result of which, the only way left to compete has been a sort of race to the bottom on labour standards.

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20 years later, the effects of this on India are apparent. Stagnant manufacturing and the governments only ideas to kick start manufacturing are to trample down further on labour laws like working hours and rueing the fact that “too much democracy” affects our competitiveness.

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It’s not as if Indian manufacturers don’t follow labour standards now. A number of private contracts with leading manufacturers (like the Apple Wistron situation showed us) include labour standards in their contracts.

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But without a multilateral trade + labour framework, there is no way for us to ensure consistency in enforcement of labour standards by private companies in various jurisdictions. I.e, we don’t know and cannot enforce what an Apple does in China.
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Ultimately, the last year has taught us that unilateral trade wars with China benefit no one.

If we’re serious about taking on China, we need to think about bringing multilateral agreements to include labour standards back on the table.

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It will also give us a framework to decide what labour reforms are just long overdue simplifications of process and what hit at the core of acceptable labour standards.

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But this won’t happen until the people leading our economic discourse stop seeing the Chinese growth story as some of model to ape.

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Our democracy and long standing framework for labour rights should be seen as an advantage not “too much democracy”. We should work to strengthen both, and then join with countries that share those values to curb exploitative manufacturing globally.

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That’s not just a bleeding heart talking. It’s the only viable way forward for our manufacturing sector.

End